Mexico, Canada leaders vow to fight protectionism

MEXICO CITY (Reuters) - Mexican President Felipe Calderon and Canadian Prime Minister Stephen Harper vowed on Wednesday to fight any move to introduce protectionist measures in the region as a way to combat the economic slowdown.

The two leaders -- who were concerned during the U.S. election race about President Barack Obama's idea of tweaking the three-way NAFTA trade pact -- agreed that the best way to speed up economic recovery was by improving competitiveness, Calderon's office said in a statement.

During a phone conversation they vowed to keep a dialogue going to "avoid the implementation of protectionist policies."

Their phone call came as the U.S. Senate voted to soften a "Buy American" plan in its $900 billion stimulus bill, after Obama expressed concern that it could trigger a trade war.

The amendment gave Mexico, Canada and other trade partners some comfort they would be exempted from a requirement in the bill that all public works funded by the stimulus package use only U.S.-made iron, steel and manufactured goods.

The United States has commitments under the North American Free Trade Agreement and the World Trade Organization to give trading partners access to its government procurement market, and has received similar pledges in return.

Calderon discussed the NAFTA trade pact in a meeting with Obama last month, shortly before his inauguration. He said afterward that Mexico was prepared to look at U.S. concerns over environmental and labor issues but that there had been no talk of reopening or renegotiating the accord as a whole.

NAFTA has greatly expanded trade in North America since it went into effect in 1994, but U.S. labor unions see it as a cause of job losses in big industrial states.

Calderon has warned in the past that restricting trade would drive more Mexicans to cross the border illegally.

Harper, who has said he does not expect Obama to push for a major reworking of NAFTA, recently warned about the dangers of erecting trade walls in a recession.